Investor communications without a bodycount

A problem I occasionally hear about from startup founders is that their investors simply don't get them. Sometimes it's reached a point where investors don't even understand what the company is doing (more common in Europe than US). When I drill into these situations, I often find that the founders have presented information to investors exactly as requested (almost always in pure financial form). Yet despite everyone ticking the boxes, massive frustration on both sides ensues.

Founder frustration in this scenario is understandable-"I'm giving investors all the data they want, the company is actually on track but they still think I'm behind target! Gaaargh!". Cue slow-motion shooting sequence.

It's critical for founders to communicate progress to investors with relevant terminology and metrics (regardless of what's asked for). Before you've closed your first investment, you should have a clear idea about the non-financial metrics which measure your performance. I'm obviously not advocating ignoring financials but you need to push hard to make sure that these core metrics are accepted as performance benchmarks. Even if you have a set of investors who say they don't care (happens more than you think), send your core metrics anyway.

One other important thing about investor reporting-always, always send it with a detailed commentary which adds context. Never assume that investors will look at your reports and draw the same conclusions. An engineer who costs $120k may simply look like a $10k monthly overhead. Or they might be the key person responsible for that feature which is critical for your monetization plan. Like all the best comedy material, it's how you tell them